MFA’s First Home and Next Home programs can only be used to finance single-family residential properties.

The property can be a detached site-built, townhome, approved condominium, modular, or a multi-wide manufactured home on a permanent foundation. Homes in Planned Unit Developments and those on leasehold land are also eligible.

All manufactured homes must meet FHA guidelines. It’s important to note that if a home has been moved more than one time, it is not eligible for FHA insurance and therefore cannot be financed by MFA.

Additionally, if a property has more than one kitchen or any additional living units (i.e. apartment, in-law quarters, etc.) it will not meet MFA program guidelines. The subject property must meet MFA guidelines at the time the borrower signs the purchase agreement and may not be modified in order to meet this requirement.

Because not all MFA-approved lenders are able to finance all property types, it is recommended that you or your buyer check with their lender in advance.

No, that’s not an accurate way to state it. Because MFA programs are really an “add-on” or “accessory” to a standard loan such as FHA, VA, USDA and HFA Preferred Conventional, we don’t have a say in the actual down payment percentage required for the loan.

While it’s true that MFA’s program guidelines require that the buyer invest at least $500 of his or her own funds toward the purchase of the home, the actual down payment required is determined by the underlying loan program.

For example, a buyer using an FHA loan is required to make a down payment equal to 3.5% of the sales price of the home. MFA has programs that can help cover that requirement; however, we want to make sure that buyers have an initial investment in the purchase, so we require that they contribute at least $500. In this scenario the balance of the down payment requirement can be financed with our First Down program, for example, which is a 30-year, second mortgage of up to $8,000.

On the other hand, a buyer using USDA’s guaranteed loan program, which provides 100% financing, isn’t required by the USDA to have any down payment. However, MFA still requires them to invest at least $500 of their own funds.

The bottom line is that we must be mindful of the distinction between the actual down payment required and MFA’s required minimum cash investment.

When it's time for your prospective homebuyer to decide which MFA-approved lender to use, they might ask for your help. It's a good idea to recommend that they call two or three MFA-approved lenders before making a final decision. A list of MFA lenders can be found at housingnm.org/homebuyers.

Here are some important questions it would be good for your buyer ask a prospective lender:

1. Ask the loan officer if their company allows them to utilize all available MFA programs. (Eligible lenders are approved by MFA to utilize all programs; however, some lenders opt to offer only one program.)

2. Ask if the lender requires a higher credit score than the MFA minimum of 620. (Lenders are allowed to set a higher score requirement and some do.)

3. What are the lender’s fees? (Although MFA sets the interest rates that all approved lenders must follow, there are differences in fees from lender-to-lender.)

4. Did the lender promptly return your call and was he/she forthcoming with information?

5. If a buyer has any special circumstances (such as no credit score or is purchasing a manufactured home or a property needing repairs) ask the lender if they can accommodate those circumstances.

6. Ask the lender to describe what the expected timeline is for the transaction. (Remember that the timeline really begins when the lender has received all initial requested documentation from the borrower, and that extra time should be allowed if unforeseen issues arise.)

The time it takes to close an MFA loan depends on several factors. The lender is responsible for taking the loan application, gathering documentation, obtaining third-party verifications, underwriting, processing, preparing final documents, closing and funding the loan.

Once the loan is underwritten and approved by the lender, they will reserve funds and upload the file to MFA for a pre-close compliance review. The file is checked in at 8:00 AM on the business day following the upload and is now in the queue for review.

The initial review can take up to three business days. When the review is complete, the lender is notified that the file is approved or that it has been suspended for conditions.

Once the lender has satisfied conditions, they are sent in a single upload to MFA to be cleared. If there are fewer than five conditions, then they should be cleared within 24 business hours; if there are five or more, it will take 48 hours. If the lender fails to completely clear conditions, the file will again be suspended.

In summary, it typically takes about 60 days for most lenders to close an MFA loan. When all parties have realistic expectations from the onset, delays are minimized and everyone has a pleasant experience!

The short answer is no. MFA sets the interest rate for each program that lenders must adhere to. They are not allowed to charge any more or any less. Additionally, lenders may not charge the borrower any discount or origination points. MFA loans are all quoted at “0+0”, meaning zero discount points and zero origination fees. This saves your buyer money!

MFA’s official rate-setting committee meets daily to analyze our rates and determine if an increase or decrease is warranted. During periods when mortgage market rates are especially volatile, the committee may meet multiple times a day in an effort to make sure our rates are competitive with those of other investors. It is because of this that our rates are subject to change at any time.

Your buyer will not know their exact interest rate until the lender reserves the loan funds with MFA. Once your buyer is “locked” into a given rate, they can rest assured that it will not change. MFA loans all have fixed interest rates for the 30-year term.
Our current interest rates are posted on our website at this link: housingnm.org/lenders_realtors/lenders-current-rates

You may rest assured that we will. In the past few years, MFA has been able to establish new funding sources that are much like what traditional mortgage investors utilize. As a result, buyers and their lenders no longer have to possibly wait until MFA releases a new bond issue before their funds can be reserved.

MFA operates under a “continuous lending” model which means that funds are made available to buyers continuously and without interruption. This type of financing allows us to offer the best possible interest rates. Your buyer’s rate will be locked in when their funds are reserved. In other words, we can finance homes for qualified buyers as quickly as you can sell them! You find the buyers and we’ll write the check!

It’s important to make sure that your buyers are working with a lender that is MFA-eligible. An MFA lender is the only way they will be able to access MFA financing. You can see a full list of participating lenders at this link: housingnm.org/homebuyers/find-a-participating-lender

MFA’s Next Home program is open to both first-time and non-first-time homebuyers. The program offers a grant that is equal to 3% of the loan amount. The grant is truly a gift and never has to be repaid!

A buyer must be able to qualify for a mortgage under FHA, VA, USDA or HFA Preferred (conventional) guidelines. Additionally, a buyer must meet MFA program guidelines. For example, MFA requires a minimum credit score of 620 and a minimum borrower investment of $500.

Because the Next Home grant is based on the loan amount rather than the purchase price of the home, the borrower must be prepared to contribute the remainder of any down payment required as well as their closing costs. Seller contributions are allowed if they meet agency guidelines.

Next Home guidelines require that the borrower’s income is $90,000 or below. The limit applies statewide and is not based on the number of people in the household. MFA does not calculate borrower income for Next Home but relies on the MFA-approved lender to determine how much qualifying income a borrower has. If that figure is under $90,000, then the borrower has met our requirement. Only the income of the person(s) signing the note is counted toward the MFA limit.

First-time buyers must take the online eHome America homebuyer education course even if they’re using the Next Home program. And, finally, Next Home has a home purchase price limit of $350,000. The purchase price is also referred to as acquisition cost.

Are Realtors able to obtain information from MFA about the status of a file undergoing a pre-closing compliance review?

Yes. MFA recognizes that Realtors, homebuilder representatives and manufactured home dealers, like lenders, are key partners to the success of our homeownership programs. We rely on our Realtor partners to help make homebuyers aware of the availability of our programs and to suggest that buyers choose an MFA-eligible lender. Accurate and timely communication between all parties to a transaction is essential in order to ensure a smooth process and positive experience for borrowers and their Realtors.

Ideally, the buyer and their Realtor will receive regular communication from the loan officer (or processor) as to the status of their MFA loan. However, it is sometimes necessary for a Realtor to contact MFA directly to inquire about the status of a loan. If you are party to a transaction, MFA will be able to provide the following information: 

Whether or not a loan reservation has been made and, if so, on what date.

Whether or not the compliance file has been received from the lender and, if so, on what date. 

The current status whether the file is still pending review or has already been reviewed. We will let you know if the file was suspended because there are some conditions or if it has been approved and on what date.

MFA will not disclose personal borrower information or details with respect to the number or nature of the conditions.

The initial review can take up to three business days. A file is placed in the queue at 8:00 am on the day after receipt and the three-day clock starts. When the review is complete, the lender is notified that the file is approved or that it has been suspended for conditions.

Once the lender has satisfied conditions, they are sent in a single upload to MFA to be cleared. If there are fewer than five conditions, then they should be cleared within 24 business hours; if there are five or more, it will take 48 hours. If the lender fails to completely clear conditions, the file will again be suspended.

MFA is committed to ensuring that the borrowers we help are given every opportunity to become successful homeowners. We want their home to be a blessing rather than a burden. For that reason, we require all first-time homebuyers to take homebuyer education. Taking the course is optional for buyers who are not first-time homebuyers.

MFA has contracted with eHome America to provide the counseling online. eHome America is considered the nation’s premier online homebuyer education platform.

MFA-approved mortgage lenders are responsible for making sure that borrowers complete the course and receive a certificate of completion prior to closing. Some Realtors even suggest to their first-time buyers that they take the course before they are under contract to buy a home since the certificate of completion is valid for one year.

The course is made up of six modules. Each module has a number of chapters and chapters might have multiple pages. Most sections begin with an introductory video, then text pages, followed by a quiz or test. A passing grade of 80% is required before moving to the next section. In some cases, it is necessary to repeat a module in order to pass.

The course is available in both English and Spanish. The cost of the course is $45 and can be paid by either a credit or debit card. Most buyers take 7 to 8 hours to complete the course but don’t do it in one sitting. They can log in as many times as needed so they can work around their busy schedules.

Anyone can take the course even if they’re not in the process of buying a home. Here’s the link: ehomeamerica.org/nmmfa

Yes. MFA recognizes that, oftentimes, married couples face some unique challenges when applying for a mortgage.

For instance, one spouse could have poor credit that prevents him or her from qualifying for a mortgage. Whatever the reason, MFA will allow a sole and separate purchase. However, there are some very important rules to keep in mind.

MFA-approved mortgage lenders are responsible for making sure that borrowers comply with agency guidelines. “Agency” refers to FHA, VA, USDA or Fannie Mae in the case of a conventional loan. Once those requirements are met, the lender must then ensure that MFA’s program guidelines are met. Primarily, MFA is concerned with how the income is calculated.

For example, when using our First Home/First Down programs, the lender MUST count the income of the non-purchasing spouse even though their income is not used for qualifying purposes. If the combined income is under the applicable limit, then they qualify.

Conversely, our Next Home program only requires that the qualifying income of the purchasing spouse be counted towards MFA’s program limit. Currently the limit is $90,000 statewide.

Another very important rule is that the non-purchasing spouse is not allowed to be on title. The home will truly be the sole and separate property of the purchasing spouse.

We hope that this information will allow you to help more potential homebuyers realize the American dream!

My client wants to purchase a home that will require some repairs and updating. Is there a mortgage program that can help?

MFA programs can be used with the FHA 203(k) streamline loan. A buyer will have the dual benefit of receiving assistance with their down payment and closing costs as well as being able to borrow up to $35,000 more to make needed repairs and desired improvements.

The list of eligible improvements covered with this loan is quite extensive and includes such items as the repair or replacement of roofs, HVAC, plumbing, electrical, and well and septic systems. Accessibility improvements for persons with disabilities are also included, as are windows and doors, flooring, siding and stucco and painting. Cost-saving improvements such as weatherization, insulation and the purchase and installation of energy-efficient appliances can be a wise investment as well.

Here’s how it works: The homebuyer first determines the type of repairs or upgrades that they would like done. They then select a contractor to complete a work plan and cost estimate. The homebuyer will work with both the mortgage lender and contractor to ensure that the work plan and cost estimate is reasonable and customary for the area. An appraisal is done to reflect an “as is” and an “as improved” value. The loan amount is based on the lesser of the sales price and rehabilitation cost or 110% of the “as improved” value.

Perhaps you have a listing or two that will benefit from a minor kitchen or bath remodel or even a new deck or patio. Knowing how the 203(k) works with MFA programs could help you sell that “diamond in the rough”!

Is it possible for a person who has no credit score to qualify for a mortgage loan?

Yes, it is. MFA accepts what is known as “alternative” or “non-traditional” credit.

When underwriting a loan for a borrower with alternative credit, the lender must verify that he or she has made regular and timely payments consistently over a period of time. Generally, the lender needs to verify at least four sources that have at least a two-year track record.

For instance, a borrower’s rental history can be evaluated to help determine his or her creditworthiness. If rent payments are well documented as having been paid on time, a lender believes there is a likelihood that the borrower will pay their mortgage on time as well.

Other examples of alternative credit can include monthly payments for auto insurance, utilities, storage unit rentals, cell phone service and even some medical accounts that are on a structured repayment plan.

It is important to note that alternative credit accounts MUST be in the borrower’s own name in order to be verified. A person who is living with his or her parents may be helping pay utilities; however,if the utility accounts are in the parents’ names, it wouldn’t be considered an acceptable source.

Using alternative credit requires the lender to manually underwrite the loan. Because the process can be very time-consuming and labor intensive, not all lenders are able to offer this service. We recommend that borrowers call the lender to inquire.

Yes, there is. MFA programs may be coupled with a special conventional loan called HFA Preferred. In fact, HFA Preferred is the only conventional loan that can be used in conjunction with MFA programs.

HFA Preferred is an exclusive Fannie Mae® product that is only available to borrowers using Housing Finance Agency programs -thus the name.

HFA Preferred offers some very attractive benefits to qualified borrowers. One major benefit is that the down payment requirement is only 3% of the sales price. That’s lower than the 3.5% currently required to obtain an FHA loan!

Another advantage to HFA Preferred is that the private mortgage insurance (PMI) coverage requirement is roughly one-half of what is normally required for regular conventional loans. In general, conventional loans typically require a slightly higher interest rate as compared to government loans such as FHA or VA. The same is true for HFA Preferred; however, the savings realized because of the lower PMI requirement can more than make up the difference. PMI is not required for the life of the loan, whereas FHA insurance is.

When financing a site-built property, HFA Preferred allows a maximum loan-to-value (LTV) ratio of 97%. For a transaction wherein the borrower also has an MFA second mortgage, the combined loan-to-value (CLTV) ratio can be as high as 105% if needed. For manufactured homes, both the LTV and CLTV are limited to 95%.

How does MFA calculate borrower income for purposes of program eligibilitiy?

The rules for calculating income are different for each of our two programs.

Next Home

For the Next Home program, MFA counts only the qualifying income that the lender’s own underwriter reports. If that figure is under $90,000 then the borrower meets our guideline. It’s that simple!

Qualifying income may or may not include such items as overtime and bonuses. For example, if a borrower receives a base salary plus occasional overtime, the underwriter must determine whether the overtime earnings are likely to continue. If not, then they may use only the base salary to qualify the borrower. In that case, MFA will only consider the base salary as well. MFA does not calculate income for borrowers using Next Home; that’s up to the lender.

First Home/First Down

For our First Home and First Down programs the rules are very different, in that all income must be counted.

Lenders are required to consider actual year-to-date earnings including overtime, bonuses, commissions and all other pay or income categories. For example, if a lender is unable to use the overtime pay as part of the qualifying income, it still must be counted for the purpose of MFA program eligibility.

As part of MFA’s pre-closing compliance review, we will examine all income documentation and confirm the lender’s calculation. The borrower must be under the limit for their respective area of the state in order to qualify for assistance.

In the event a married borrower wishes to do a sole and separate transaction, the lender MUST count the income of the non-purchasing spouse even though their income is not used for qualifying purposes. If the combined income is under the applicable limit, then they qualify.

Click here to link to our factsheets for more information and all current income limits: housingnm.org/lenders_realtors/fact-sheets. We hope that this information will allow you to help more potential homebuyers realize the American dream!

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